The Nome City Council faces a lean fiscal future, and with efforts to more dutifully collect sales tax already underway, the council is now leaning toward stripping churches and other nonprofits of their sales tax exemptions.

The council’s work session on Monday, Aug. 25 looked at two ways to collect more sales tax to boost city coffers: either charging sales tax on a long list of heretofore untaxed services—like banking, used car sales over $1,500, medical services, and more—or eliminating sales tax exemptions for city churches, regional nonprofit Kawerak, and more than 40 organizations.

Assessing sales tax for transactions that would be difficult to track proved unpalatable to the council, which instead found favor with the idea of eliminating sales tax exemptions for dozens of currently-exempt organizations in town.

The City Council may remove sales tax exemptions from organizations listed under “other.” Image: City of Nome. (Click to download PDF)

Council member Matt Culley said the only way to remove the exemptions fairly would be to strip them across the board.

“My personal opinion, when it goes this way, is take them all, so we’re not biased,” Culley said. “We’re not picking and choosing what we think is great. Get rid of them [all]. And if the city gets healthy again, then you can go back and look at them.”

The city already relies on sales tax for the bulk of its revenue. City finance director Julie Lew said removing the sales tax exemptions could bring in as much as $800,000 a year.

Collecting sales tax from organizations that don’t currently pay it wasn’t the only option on the table. The council also looked at closing loopholes in city code that leaves property like dredges (and, potentially, airplanes) untaxed if they’re in town only part of the year. Closing that loophole could mean additional fees for port users, or assessing a “pro rata” property tax based on how long a vessel is in town.

But it was all just talk at the work session; it will take weeks, or even months, before the council finalizes any plans to adjust how it collects sales tax.

Following the work session, the council breezed through business in a regular session, approving the third and final phase of planning for the town’s new museum, library, and cultural center, the Richard Foster Building.

The council’s approval means $620,000 was released for additional work this year, but project manager Kendall Ghee with engineering firm Dowl HKM said there’s still a portion of the project’s $19 million price tag that has yet to be secured.

“The city [has] still about $300,000 left to fund their portion of the project,” Ghee said. Kawerak is partnering with the city to construct the building to house its Beringia Museum. Ghee said the nonprofit “has about $1.2 to $1.5 million which they need to get all of their stuff down.”

The unfunded gap won’t stop the project, Ghee said.

“We have the money for the building. You know, $300,000, there’s things that can be deferred, and that will be deferred. We have contingencies, so, we’re doing well.”

Ghee said site work and utilities are currently being built into the new facility, with materials now being brought to Nome for the building’s foundation and steel frame. He said that work should be in place before winter shutdown, with construction slated to resume in the spring.

]]>http://www.knom.org/wp/blog/2014/08/29/city-council-leans-toward-removing-sales-tax-exemptions-for-churches-nonprofits/feed/111582Contentious Contract, ‘Beringia Museum’ Funding Dominate City Councilhttp://www.knom.org/wp/blog/2014/06/26/contentious-contract-beringia-museum-funding-dominate-city-council/
http://www.knom.org/wp/blog/2014/06/26/contentious-contract-beringia-museum-funding-dominate-city-council/#commentsThu, 26 Jun 2014 19:39:30 +0000http://www.knom.org/wp/?p=10014Funding for the Richard Foster Building and a proposed alcohol and tobacco tax were overshadowed by a divisive contract for maintaining the city’s fleet of emergency vehicles. ]]>http://www.knom.org/wp-audio/2014/06/2014-06-26-City-Council-Contract-Dispute.mp3

The ongoing struggle to fund Nome’s new museum and library—and Kawerak’s Beringia Museum—shared the stage with a divisive contract for ambulance and fire truck repairs at Wednesday’s Nome City Council meeting.

The Richard Foster Building is set to house both the city’s and Kawerak’s museums, as well as the city library. But with funding $3.2 million short—funding that was meant to be secured by Kawerak—several irate city council members said that, while they want the project to succeed, they are willing to shelve construction until it’s fully paid for.

“Kawerak needs to be in it. Their lease agreement is what makes running this facility for the city feasible,” said council member Matt Cully. An important caveat, Cully added, was the necessity of Kawerak securing the millions it still needs in funding. If it can’t, Cully said he’ll vote to mothball the entire construction.

“I’ll leave a steel structure up. We’ll have those panels covered in plastic … it’ll be a metal jungle gym. Because if we can’t find that funding, [Kawerak’s] not in it, we don’t get Rasmuson [Foundation funding] … this museum can’t happen.”

The council’s solution, ultimately, was a six-to-one vote to extend Kawerak’s lease in the planned building through July 2015. Kawerak’s lead on the Beringia project, Amy Russell-Jamgochian, said that will provide enough time to secure funding.

“It is a window for Kawerak and the city to jointly fundraise,” Russell-Jamgochian said of the extended lease after the meeting. “Our lease and memorandum of agreement enables Kawerak to show that this is a public-private partnership to our funders that we have access to. Now we have that document extended into another year to find the rest of the funding.”

The council also approved $7 million for purchasing fuel for the city utility, and took testimony from members of the public supporting an increase in alcohol and tobacco taxes.

But that was all prologue to what became a divisive contract for maintaining the city’s fleet of emergency vehicles. The winning bid was by Trinity Sails—a business operated by KNOM chief engineer Rolland Trowbridge—but several council members questioned whether Trowbridge’s business had the proper zoning to take on the contract.

While it wasn’t clear how the zoning concern was raised to the council—or who raised it—council members Stan Anderson and, via teleconference, council member Jerald Brown both spoke to it.

“It’s zoned general use, and not allowed as vehicle or equipment repair facility,” Anderson said as the contract came up. Discussion continued about a possible conditional use permit for Trowbridge’s shop, but ultimately, the language of the contract required a shop with proper zoning.

“General use district does not permit even a variance for a vehicle repair facility,” Brown said.

The property in question is along West 2nd Avenue and C Street, which for decades operated as the Perkins Suzuki Arctic Cat Shop. The shop came to Trowbridge in July 2013. At the meeting, Trowbridge conceded zoning may have been an issue for the contract, but he took issue with how the council handled it.

“I understand why the vote went the way it went, but I do not like the process that it went through,” Trowbridge said while addressing the council. “I think the objections that were written were basically straw arguments. And I feel that bringing up the zoning at this time is also a straw argument. And that the rejection of my bid is basically an old boys network going into action.”

After the meeting, council member Louie Green Sr. dismissed claims of any network or favoritism.

“No, because the Planning Commission is the ones that’s done the planning and stuff like that,” Green said. “It’s there on paper, you know?”

For now, the city’s current contract with Nome Machine Works remains in place until late July. Council member Matt Cully said unless the zoning is resolved, the contract will stay there, as Nome Machine Works was the only other bidder.

“The bid process is, if he doesn’t meet the qualifications, the other bidder gets it,” Cully said. “There may be an instance of a ‘grandfather clause’ where that facility was used by a previous tenant in the last two years, where he has the ‘grandfather clause’ where he can operate a shop out of it. But that’s what we need to find out.”

Council members said they will consult with the city attorney as they look into zoning, the contract process, and who ultimately gets the contract. They aim to resolve the issue, and potentially vote on a new tobacco and alcohol tax, at their next meeting on July 14.